Interest in India has been picking up steadily among investors, thanks to its growing economy , strong stock market performance and burgeoning population . As the Diwali festive season gets underway in the South Asian powerhouse, several sectors — and stocks — are expected to do well, according to analysts at equity research firm Kotak Securities and asset management house Mirae Asset. Samvat 2081 — which starts on the day of Diwali on Oct. 31 — marks the start of the Hindu new year. Some investors view it as a new beginning for markets. The new year is commencing with most sectors — and stocks — being overvalued, according to Kotak’s analysts. The rich market valuations, they added, make any market correction an opportunity to scoop up quality stocks with attractive valuations for the long term. Their comments come as Indian markets made history in Samvat 2080 — or last year — with the BSE Sensex surpassing 85,900 points in September while the benchmark Nifty 50 index crossed 26,250. Year-to-date, The BSE Sensex index — which represents 30 of the country’s largest and most traded firms on the Bombay Stock Exchange — is up around 10.9% as of Oct. 30, while the benchmark Nifty 50 index is around 12.2% higher. Here are four buy-rated Indian stocks with over 30% potential upside that analysts are betting on this Diwali. Fiem Industries Fiem Industries is among Kotak Securities’ top picks thanks to its debt-free balance sheet and robust cash flows. The manufacturer of automotive lighting and rear-view mirrors caters primarily to two-wheelers and has been “outperforming,” the industry, the analysts wrote in its initiation report on Sept. 3. They added that “Fiem is well-placed to benefit from [a] two-wheeler industry recovery,” which has picked up in the festive period, following sluggish sales between July and September. The company’s growth is also supported by rising adoption of LED lighting in automotives, Kotak noted. Going forward, the analysts have penciled a 15% CAGR (compound average growth rate) for Fiem’s revenue between full-year 2024 and full-year 2027, and 19% CAGR for its earnings. Shares of Fiem trade on India’s National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) and are up nearly 45% year-to-date. Kotak has a 12-month target price of 2,140 Indian rupees ($25.45) on the stock, implying around 40.8% potential upside. Gravita India Material recycling company Gravita India was another stock on Kotak’s list. The research house likes that Gravita’s pan-India presence across 22 states “provides sourcing benefits and fungibility.” Other factors in its favor include regulatory tailwinds promoting recycling and the formalization of reverse charge mechanism on metal scrap, Kotak’s analysts wrote in a Sept. 30 note. Looking ahead, they expect Gravita’s earnings per share to grow 31.8% in full-year 2025 and 35.8% in 2026. The stock, which is up around 85.1% year-to-date, trades on India’s NSE and BSE. It is also included in the iShares MSCI India Small Cap ETF (0.1% weighting). Kotak has a 12-month target price of 2,800 Indian rupees on the stock, implying a 38.2% potential upside. S H Kelkar and Company Also on Kotak’s list is fragrance and flavors supplier S H Kelkar and Company . The research house describes the company as an “emerging player” that is “well-placed to drive double-digit revenue growth.” “SHK[‘s] tiny relative to global majors, but its technical capabilities are reputable,” Kotak’s analysts wrote in their Sept. 30 re-initiation report. They pointed out SHK’s “reputable” technical skills and the inroads in global markets as other merits. “We see a long runway for growth, given its established and sticky relationships,” the analysts added. Shares of SHK are listed on India’s NSE and BSE and are up 103.3% this year. Kotak has a 12-month target price of 400 Indian rupees on the stock, or close to 35% potential upside. Gabriel India Meanwhile, asset manager Mirae Asset is betting on Gabriel India , an automotive parts manufacturer. The company — which is owned by automotive manufacturer Anand Group — is a market leader in the manufacture of ride control products such as suspension systems and shock absorbers. Mirae likes Gabriel’s steady revenue visibility and “increasing content per vehicle” in the shock absorber segment driven by its launch of new products. Another plus is that it is a “key beneficiary of increasing sunroof penetration in India led by premiumization trend and import substitute,” the analysts added in a recent note on its Diwali picks. Shares of Gabriel India are listed on India’s NSE and BSE and are up 13.4% this year. According to FactSet data, all eight analysts covering the stock have a “buy” rating at an average target price of 581.25 Indian rupees. This gives it 30.1% potential upside.
